Did That Money Your In-Laws Gifted You In Marriage, Turn Into a Loan In Divorce?
Was there a documented Family Loan Agreement? In today’s economy, as the cost of living increases and housing costs rise faster than income, family members are stepping in to help newlyweds get on their feet now more than ever. These financial gifts are usually given and received with love and gratitude, up until the point where the marriage turns sour. Now your ex In-Laws are stating that the money they gave you was in fact a loan and now expect repayment.
These types of disputes are becoming more common, and if there is no established family loan agreement in place, it can be difficult to prove the intent of monetary transactions. You can attempt to negotiate with your ex-spouse and their family, but if an agreement cannot be reached you will most likely find yourself in family court. During the hearing, a judge may use some of the following to determine the nature of the transaction:
· Email correspondence
· Memos/ notations on canceled checks
· Gift letters (a standard requirement by banks during the home buying process)
· Frequency of payment ( periodic payments may be indicative of a loan)
In regards to loans, a verbal agreement is just as enforceable as a written one. However, if there is a lack of clear documentation or evidence in support of a loan claim, courts more than likely will determine that the exchange was a gift. Legally, gifts have a specific definition where intention, relinquishing of possession, intent, and delivery must all be present. If the courts rule that the exchange was indeed a gift, then the funds are no-recoverable. Nonetheless, the division of property can still favor the spouse whose family gave the money; thus providing justification for that spouse to receive a greater share of assets.
With divorces being difficult and complex, to begin with, this adds another example as to why strong representation in divorce cases is a necessity. Don’t go through it alone; consult an experienced divorce attorney to help you navigate through this unfortunate situation. Where in-laws can add undue anxiety to an already stressful ordeal, having the proper family law attorney can make all the difference.